There's No Holiday Cheer in Sears' Early Christmas Push

It's not the first time Sears Holdings (NASDAQ: SHLD  ) has pushed the envelope by using Christmas in its advertising earlier than what would be considered seemly. For example, a few years ago, it created an online shop called "Christmas Lane" that appeared in July, but the limited nature of that move kept the rancor down.

Not so today. This week, Kmart really went beyond the pale by running TV ads promoting its Christmas layaway services just as kids were returning to school.

According to the folks at AdAge, at 105 days before the holiday, it marks the earliest time ever a retailer has tried to juice its sales by using Christmas in its advertising. While the story goes on to note that the National Retail Federation says some shoppers do start this early -- 12% actually begin Christmas shopping before September, while another 6% use the start of the school year to get a head start on their seasonal excess -- Sears' attempt to capture that early mindshare had consumers and critics alike lamenting the lack of propriety surrounding the effort. Apparently, its Facebook page lit up with people crying, "Too soon!"

Retailers, though, are offering up cautious guidance for the back end of 2013. Consumers are apparently reluctant to go to excess with their spending, and that may cause them to follow Kmart's lead in advancing holiday creep. 

Macy's (NYSE: M  ) reported earnings that rose 7% year over year, but those were well below analyst expectations, leaving it to cut its outlook for the rest of the year. It lowered its fiscal 2013 earnings estimates to a range of $3.80 to $3.90 per share versus its prior guidance of $3.90 to $3.95 per share.

Similarly, Target (NYSE: TGT  ) reported earnings that were at the top of its guidance for the second quarter, even as comps were lower than anticipated, but now says its full-year adjusted profits will come in at the low end of the guidance it gave of $4.70 to $4.90 per share. Wal-Mart (NYSE: WMT  )  as well took the opportunity of its latest earnings report to scale back expectations, cutting its full-year outlook to $5.10 to $5.30, compared with the $5.20-to-$5.40-per-share view previously offered. As CEO Mike Duke noted, "The retail environment was challenging across all of our markets." 

Not that it's any surprise, really, but Sears' own earnings report last quarter recorded further sales slippage, and it likely is at least partly responsible for its decision to beat everyone else out of the gate in hawking its Christmas service. Revenues fell by almost $600 million in the second quarter, or 6%, to $8.9 billion, while losses widened to $1.83 per share from $1.25 in the second quarter of 2012. 

Although it makes sense to promote layaway services earlier than other programs, it's not the first time Sears has pushed one. It was among the first retailers to resurrect the concept several years ago after it had lain dormant as consumers turned to the Internet to do their shopping. But layaway programs found new cachet during the recession, and Sears even added the innovative concept of combining it with online shopping.

While the discount retailer can sometimes nail its creativity with sharp, witty ads -- like its well-executed "Ship My Pants" spot -- this latest effort seems to push the envelope too far and risks alienating customers who are already upset by season creep. When even beer lovers fret over pumpkin ale appearing on store shelves before summer ends, Sears forcing consumers to think about Christmas when they just dropped off Sally and Johnny for their first day of school is likely to create a silent night of returns rather than a winter wonderland of profits.

The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of the last century. Only the most forward-looking and capable companies will survive, and they'll handsomely reward investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.


Read/Post Comments (4) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 12, 2013, at 5:52 PM, SuntanIronMan wrote:

    I know people who have already statred their Christmas shopping (and one person who has apparently already finished). I think it is way too early, but I appear to be in the minority there.

  • Report this Comment On September 12, 2013, at 7:13 PM, 45ACPbullseye wrote:

    When I went to the supermarket yesterday, there was a huge display of pumpkins of every shape and size outside of the store. I felt like Rip Van Winkle -- did I just sleep for three or four weeks and wake up in October?

  • Report this Comment On September 13, 2013, at 6:52 PM, withOpenMind wrote:

    Boring. Yawn.

  • Report this Comment On September 16, 2013, at 3:20 PM, CapHoya wrote:

    This - while desperate and unsightly - might actually be smart. Kmart in particular suffers from customers who put in big layaway orders but are not able to ultimately finish paying off their contract. This puts seasonal merchandise back on the floor when there is little time left to sell it, so they must give it away for little or no profit. This earlier time could remedy that, but then again what are the odds of SHC managing anything well?

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2635595, ~/Articles/ArticleHandler.aspx, 10/24/2014 12:28:01 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement